DSE seeks clarification from BSEC
Dhaka Stock Exchange has requested the capital market regulator to clarify in what category the Lafarge Surma Cement, which is now under junk Z category, will be placed after the declaration and disbursement of 5 per cent interim cash dividend by the company. Lafarge, which has been under Z category for years for its failure to declare any dividend because of losses, on June 10 declared 5 per cent interim dividend for 2014 based on the earnings of first five months of the year. The company became profitable this year.
But the company’s interim dividend declaration has created confusion among the DSE officials as well as investors about the category change.
According to the rules, any company declaring 10 per cent or more dividend is placed under top-class A category, the company declaring dividend between 5 per cent and below 10 per cent is placed under B category while any company failing to declare any dividend or hold regular annual general meeting is placed under Z category.
Any new company under placed under N category after listing and remains at the category till the holding of AGM. ‘We have recently forwarded a letter to the Bangladesh Securities and Exchange Commission seeking clarification on settlement regulation as it has no clear direction in the regulations regarding the category change of any company after its interim dividend declaration,’ a DSE official said.
As per the DSE’s Settlement Regulations- 2013, shares of any company will not be degraded to ‘Z’ category if the company declares dividend for its shareholders based on the last calendar year’s financial report, he said.
The regulations also stipulates that ‘G’, ‘N’ and ‘Z’ category companies will be upgraded to the ‘A’ or ‘B’ category considering their dividend declaration and compliance with other regulations, the official said.
The regulations, however, did not mention anything about category change of a company that will declare interim dividends for its shareholders based on un-audited financial statement, the official said.
He also said that the bourse sought clarification from the regulator as there is a perception among the investors that Lafarge Surma Cement will be upgraded to ‘B’ category after the declaration and disbursement of the dividend.
He said many of the investors are lured into the trading of Lafarge shares as the change of category of Lafarge will allow the share settlement in three days under B category from 10 days under Z category.
Lafarge has set the record date for dividend declaration on Jun30 after which it will disburse the dividend among the investors.
Asked, a BSEC official said that as per the existing regulations there is no scope to allow any company to upgrade from ‘Z’ category based on its interim dividend.
He, however, said that the commission high ups would decide on the DSE’s letter.
-With New Age input
